Water Property v HMRC

Cathya Djanogly

In Water Property v HMRC [2016] UKFTT 721 (25 October 2016) the FTT found that supplies of property made by Water Property were not grants ‘made by a developer’ for the purpose of VATA 1994 Sch 10 para 13(2) so that the expenditure on acquisition and conversion of the property was not a ‘capital item’ (VAT Regulations 1995 para 13) and VATA 1994 Sch 10 para 12 did not prevent the option to tax made by Water Property from having effect.

Water Property had acquired a building subject to planning permission to convert the ground floor into a children’s day care nursery and the upper floor into flats. It had then granted a lease of the ground floor and entered into two building contracts: one for the alterations to form a nursery; and the other for the development of three flats. Works on the flats had...

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